Correlation Between WPP PLC and AGNC Investment

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both WPP PLC and AGNC Investment at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining WPP PLC and AGNC Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WPP PLC ADR and AGNC Investment Corp, you can compare the effects of market volatilities on WPP PLC and AGNC Investment and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in WPP PLC with a short position of AGNC Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of WPP PLC and AGNC Investment.

Diversification Opportunities for WPP PLC and AGNC Investment

-0.53
  Correlation Coefficient

Excellent diversification

The 3 months correlation between WPP and AGNC is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding WPP PLC ADR and AGNC Investment Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AGNC Investment Corp and WPP PLC is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on WPP PLC ADR are associated (or correlated) with AGNC Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AGNC Investment Corp has no effect on the direction of WPP PLC i.e., WPP PLC and AGNC Investment go up and down completely randomly.

Pair Corralation between WPP PLC and AGNC Investment

Considering the 90-day investment horizon WPP PLC ADR is expected to under-perform the AGNC Investment. But the stock apears to be less risky and, when comparing its historical volatility, WPP PLC ADR is 1.17 times less risky than AGNC Investment. The stock trades about -0.67 of its potential returns per unit of risk. The AGNC Investment Corp is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  955.00  in AGNC Investment Corp on October 8, 2024 and sell it today you would lose (11.00) from holding AGNC Investment Corp or give up 1.15% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

WPP PLC ADR  vs.  AGNC Investment Corp

 Performance 
       Timeline  
WPP PLC ADR 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in WPP PLC ADR are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, WPP PLC is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.
AGNC Investment Corp 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days AGNC Investment Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, AGNC Investment is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

WPP PLC and AGNC Investment Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with WPP PLC and AGNC Investment

The main advantage of trading using opposite WPP PLC and AGNC Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WPP PLC position performs unexpectedly, AGNC Investment can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in AGNC Investment will offset losses from the drop in AGNC Investment's long position.
The idea behind WPP PLC ADR and AGNC Investment Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
Check out your portfolio center.
Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.

Other Complementary Tools

Price Transformation
Use Price Transformation models to analyze the depth of different equity instruments across global markets
Latest Portfolios
Quick portfolio dashboard that showcases your latest portfolios
Portfolio Diagnostics
Use generated alerts and portfolio events aggregator to diagnose current holdings
Crypto Correlations
Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins
Options Analysis
Analyze and evaluate options and option chains as a potential hedge for your portfolios